Pelosi's portfolio performance now wrapped in an ETF

Short of being elected to Congress, most investors don’t stand much of a chance competing against the likes of U.S. House Speaker Nancy Pelosi. The California Democrat has become the poster child for trading activity by members of Congress that leads to blockbuster portfolio performance.

To try and level the playing field, a new exchange-traded fund will be investing based on public filings from the 82-year-old congresswoman.

The Insider Portfolio ETF (INSDR), which began trading on the MERJ Exchange Tuesday, is designed to give everyday investors the opportunity to benefit from the kind of inside information that’s only available to members of Congress.

“Nancy Pelosi is like the best meme stock trader in the world,” said Jaime Rogozinski, founder of the Reddit’s WallStreetBets forum that launched the ETF.

The portfolio, which is being managed by Digital Markets, will allocate to specific stocks based on 13-F filings from the 18-term representative, which means there will be some lag time between Pelosi’s actual portfolio and what the ETF holds on a daily basis.

“Obviously, we’re not going to be able to replicate her performance one to one, but even if we can get a whiff of the performance, investors will be able to get some of the returns she’s been able to enjoy,” Rogozinski said.

Even getting a portion of Pelosi’s performance is still pretty good when you consider that one portfolio tracker measured her 2021 portfolio gains at more than 50%, which compares to a gain of more than 28% for the S&P 500 Index.

“If you are not blessed with the financial savviness of the U.S. Congress members, the world of investing can be inaccessible and intimidating to the novice investors we know as constituents,” Rogozinski said.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said the key to the new ETF’s success will be access, but he believes the concept is spot-on.

“There’s been a lot of attention given to how Pelosi’s portfolio has performed and there’s a bit of cynicism there that they’re cheating somehow,” he said. “I could see something like this catching on.”

Pelosi claims her husband, Paul Pelosi, is the trader in the family, and public records show her 81-year-old husband to be both active and proficient when it comes to investing. Paul Pelosi’s investing acumen has even spawned a social media movement mocking the coincidence of his stunning success.

After a groundswell of criticism from the general public, Nancy Pelosi recently endorsed a plan for tighter rules on insider trading by members of Congress. But Rogozinski isn’t too worried that the rules will be drastic enough to derail his new fund.

“When the subject of insider trading came up a decade ago, Congress turned around and passed a slap on the wrist, requiring them to disclose a little more,” he said. “We might see some watered-down potential controls, but I believe they won’t lose their abilities to pick stocks and continue to retain their competitive advantage.”

In terms of how the ETF could be impacted if Pelosi ever retires from Congress, Rogozinski said they will find another congressperson’s portfolio to track.

“The entire vision was Nancy, but because we’re trying to get regulatory compliance, and this is a serious product, we wanted to have flexibility,” he said. “This allows the longevity to outlast any person. The entire thing is built around her portfolio until there’s reason to change it.”